China, EU must focus on dialogue, not disengagement

The recent progress in China-European Union trade talks in Beijing has offered businesses on both sides some welcome relief, but the European Commission's renewed push to consider import restrictions on Chinese goods in sectors such as chemicals and machinery underscores how much work remains to build a more stable economic relationship.

The outcome of the trade talks in Beijing is positive, not least because it was achieved through dialogue. Only a few weeks ago, many had anticipated further escalation in trade tensions. Instead, Chinese Minister of Commerce Wang Wentao and European Commissioner for Trade and Economic Security Maros Sefcovic reached consensus on 16 points covering trade and investment balance, export controls, intellectual property rights and World Trade Organization reform.

Now the prospect of extending curbs to other industries risks putting further strain on trade ties before the benefits of the Beijing negotiation can fully materialize. The priority should be to build on the progress made through dialogue, predictable rules and improved market access, rather than allow new restrictions to become the default response to economic differences.

The consultation mechanism established in June between China and the EU has already delivered tangible results, demonstrating the potential to address difficult issues through dialogue and within the framework of international trade rules.

For businesses on both sides, the predominant feeling is one of relief. Companies crave predictability, and every rumor about a possible trade war can delay investment decisions and strain supply chains.

A negotiated understanding, a clear timetable for further discussions in January and March, and a commitment to keep communicating are precisely the signals businesses were waiting for.

Both sides rightly describe this outcome as a starting point rather than a conclusion. It is a solid foundation that should be further developed.

The agreements on rare earth export licensing and hybrid vehicles are particularly significant because they address concrete concerns on both sides rather than trading broad criticisms.

For German industry, especially its small and medium-sized enterprises that form the backbone of the country's industrial economy, the green channel for rare earths and permanent magnets is of immediate practical importance. Many suppliers, machinery manufacturers and automotive companies depend on these materials. Faster and more predictable licensing can directly support production in Germany.

The next logical step would be to transition from individual approvals toward longer-term licensing arrangements, providing companies with the planning security they need.

On hybrid vehicles, the two sides reached an understanding that is consistent with WTO rules and addresses trade differences and mutual concerns. This has helped avert a potentially damaging spiral of tariffs and countermeasures, benefiting German carmakers deeply connected to the Chinese market.

Meanwhile, the prospect of improved market access and lower tariffs for European products, from automotive parts to olive oil and footwear, demonstrate an essential principle: a more balanced economic relationship does not have to mean less trade. Balance can also be achieved by expanding opportunities on both sides.

Our objective should be balancing upwards, that is to achieve balance by expanding the trade pie through greater market access, increased exchange and more opportunities, rather than shrinking it with more restrictions.

The next phase of China-EU trade relations should focus on rebalancing, not disengagement. This requires action in four areas.

First, the commitments already made must be implemented transparently and reliably. Trust is built through results, and businesses need to see agreements translating into practical improvements.

Second, we need better market access in both directions. There is considerable potential in sectors such as medical devices, pharmaceuticals, agri-food, services and the digital economy. Concrete improvements in these areas would greatly benefit businesses.

Third, both sides should encourage investment and joint value creation. Chinese companies investing and producing in Europe, and European companies continuing to invest in China, can create jobs, strengthen industrial capacity and generate new opportunities on both sides. There is also considerable scope for cooperation in new energy, green technologies, mobility and artificial intelligence, including in third markets.

Such cooperation should not be viewed as a concession but as an opportunity to combine complementary strengths, develop new markets and create value that neither side could generate as effectively on its own.

Fourth, Europe must do its own homework. Europe's competitiveness will ultimately be determined within Europe itself. Factors such as energy costs, infrastructure, the efficiency of approval processes, education systems and, above all, the capacity to innovate will shape the continent's economic future.

Competition from China is real, as it has become a major industrial powerhouse. But competition should not be mistaken for hostility. It can be a powerful stimulus for innovation and renewal, serving as an incentive for Europe to become more competitive rather than an excuse to close its markets. Where concrete market distortions exist, they should be addressed precisely, proportionately and on the basis of established rules, with dialogue as the primary tool.

China and Europe are too important for one another, and for the global economy, and their relationship should not be defined solely by risks and disputes. The Beijing talks have shown that the channels of communication work. We should now leverage them to transform this initial progress into a more stable, reciprocal and mutually beneficial economic relationship.

The author is chairman of the board of the German Federal Association for Economic Development and Foreign Trade and chairman of China Bridge, a Berlin-based public diplomacy forum dedicated to fostering constructive engagement with China.

The views do not necessarily reflect those of China Daily.

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